Alphabet Inc (GOOG)

Some regulatory risks have now lifted. Still a decent valuation of 23x forward PE, discount to mega-cap peers. Continues to dominate digital ad space. Applying generative AI across the board. Cloud's a bit behind MSFT and AWS, but the entire space is growing so revenues are too. $100B in cash reserves gives lots of options.

Shares jumped over 8% today on a court ruling; GOOG skirts an anti-trust, anti-monopolistic ruling involving Apple. He regrets selling it before after a huge gain. 

Thinks it's going higher, but perhaps don't buy now. Wait for pullback. There's always a reason for a stock to pull back at some point, but he can't predict the magnitude.

At this level, risk/reward is not as good as entering at a lower price. Trades ~20-21x forward PE, whereas NVDA is trading at 40x forward PE or more. Lots of upside potential in things we're not even talking about yet, such as quantum computing -- freebies that may not be baked into the valuation today.

Dumping a high-growth tech stock then planning to buy back at a lower price is a lot harder than you think. He sold GOOG after the Justice Dept. called GOOG a monopolist. Then, GOOG went up and the Justice Dept. did not break up GOOG. He didn't get back into the stock. In fact, GOOG is worth more if it is broken up into separate companies. He has tremendous remorse over selling it. Lesson: trading is the enemy of many investors.

Waymo's self-driving is here and will see hockey stick-shaped growth.

You need to focus on the types of queries that go in. If he wants to learn about uranium and nuclear powering data centres, he'll do a deep dive on ChatGPT. But if he needs new shin pads or a hockey stick, he'll go on Google to find a vendor. 

So the search volume is changing in intent, and Search queries in Google are becoming much more commercial. YouTube is an absolute beast.

The cloud services business started generating positive operating income, but the other ones are negative. There is so much underlying value in GOOG. The big risk is regulation, but if forced to break up, then parts of the business will sell off. GOOG generates tons of free cash flow, and are great in allocating capital. Offers big value.

The cloud services business started generating positive operating income, but the other ones are negative. There is so much underlying value in GOOG. The big risk is regulation, but if forced to break up, then parts of the business will sell off. GOOG generates tons of free cash flow, and are great in allocating capital. Offers big value.

Not a lot of meaningful competition. Good earnings growth at 13-15%. Not expensive at 20x forward PE. AI and  cloud momentum is key moving forward. Ad platform continues to be the monster out there. Will perform well as macro conditions and ad budgets improve. Strong cash position provides resilience during tough times and could lead to aggressive share repurchases, which helps with EPS.

He just bought it, owning six of the Mag 7. Momentum hasn't been this strong since Q4 2023.

A favourite among the Mag 7.

In his momentum mandate. Reported 2 days ago and beat on sales, earnings, and other key performance metrics. Earnings up ~22%, sales up 15%. Acceleration of cloud computing, now ~$50B a year and probably the fastest-growing part of the business. Stepping up capital spending on the AI arms race, yet also authorized to buy back $70B in stock. Very cash-generative.

Trying to get its head around monetizing AI in Search, and he thinks they will.

The numbers reported this week were really good. YouTube pulled in $10B in ad revenue. Holds assets it hasn't even monetized yet. Search is at risk, and the multiple reflects that. He's watching all the AI plays to see how they monetize.

He'd pick this one, for at least a trade. Only one of the Mag 7 below the market multiple.